According to the data on the geology, geochemistry, experimental analysis and production test of Liaohe Depression, the reservoir forming conditions of shale gas and oil were analyzed in this study. It is found that the Paleogene shale in the sedimentary basin has an extensive distribution, large thickness, high organic carbon content and wide variation scope of maturity of organic matter. It provides the material conditions for the formation of shale gas and oil. The shales have developed micropores and fractures, which provide favorable reservoir space for the free hydrocarbons. Due to the strong adsorption ability of shale, the gas logging abnormal of total hydrocarbons is usually present in the shale. A huge reserve of shale gas and oil resources is indicated. The shale reservoir usually has a high content of brittle minerals, so the fracturing technique can be applied for development. Therefore, the Paleogene strata in Liaohe Depression contain abundant shale gas and oil and the associated tight gas and oil resources. The shale gas and oil in the hydrocarbon generation sag and the surrounding shales and the interbed are the new deposits under the deep exploitation of Liaohe Depression. The shale gas and oil in the West Sag has the highest potential.